Breakdown of Marriage: Physical and Mental Cruelty

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Separation alone is difficult to deal with.  When the issues concerning adultery, physical and mental cruelty become involved, it can make a difficult situation that much worse.  If these concerns are a part of the separation between two spouses, courts here in Canada will implement a “no fault” regime.  This means that when a person’s rights are being determined in regards to: the children, child or spousal support, and property division, the fault of one party causing the breakdown of the marriage is usually not taken into consideration.

Courts will approach divorce in an objective manner; this generally means they do not look at the reasons for separation, and they won’t punish a spouse for their role in the breakdown of the marriage.

There are three reasons why a divorce can be granted:

  1. Separation;
  2. Adultery; and
  3. Physical and Mental Cruelty.

This blog post will focus on the third ground for divorce: physical and mental cruelty.  See our previous blog post for more information on the first ground of separation.

One thing to note here is that when seeking a divorce under the ground of separation, you have to wait at least one year.  An advantage of claiming a divorce under physical and mental cruelty is that you do not have to wait one year post separation in order to get your divorce.

Physical or Mental cruelty

If a party is claiming one of these grounds for divorce, they will have the onus of proving it on a balance of probabilities.  Trying to prove domestic violence in this regard can be difficult, costly, time consuming, and can be very emotionally draining.

Catherine Christopher in The Law of Domestic Conflict in Canada, identifies 4 different types of domestic violence:

  1. Physical
    1. Might be most readily identifiable – bruise patterns, fractured bones;
    2. Might be defined as including any kind of unwanted application of force, the use of which is intended to harm, threaten, or intimidate by one partner against another partner in an intimate relationship;
    3. Acts can include:
      1. pushing, pinching, slapping, hitting, punching, hair pulling, twisting limbs, restraint of movement and choking – this list is not exhaustive.
  2. Emotional
    1. Understood to be an act of unkindness or cruelty by one person calculated to threaten, intimidate, diminish or belittle another person in an intimate relationship;
    2. Can include:
      1. name-calling, yelling, screaming, belittlement of one’s body and ability, threats to harm partner, children, friends, family members or pets; physical abuse of pets; destruction of property including items of clothing or precious gifts; threats of suicide; acts of attempted suicide, particularly in the presence of children or a partner.
  3. Sexual
    1. Criminal code defines sexual assault and related offences in fairly specific terms;
    2. Possible to define certain acts as sexual abuse within confines of a relationship;
    3. Acts can include:
      1. enforcing a dress code, bringing unwanted pornography into home, forcing an unwilling partner to watch pornography, forcing unwanted sexual acts, forcing unwanted sexual acts with others, belittling sexual performance and body type, withdrawing sexual involvement or affection, and making unwanted overtures in public;
    4. Sexual abuse may also be said to be emotionally abusive conduct.
  4. Financial
    1. Can be defined as unwanted aggression, control and/or domination committed by one partner against another involving money or financial resources;
    2. If one partner controls all of the financial resources to exclusion of other against their will, then abusive element emerges;
    3. Acts can include:
      1. failing to share money, purchasing all food and clothing, limiting or restricting entirely all access to financial resources or to information regarding financial resources, failing to provide essentials such as food, clothing and medical treatment.

In order for the physical and mental cruelty to be used as a reason for divorce, it must be “of such kind as to render intolerable the continued cohabitation of the spouses.”  See the language in s. 8(2)(b)(ii) of the Divorce Act.  This is a high bar to meet and will require diligent evidence production in order to satisfy the court that the abuse meets that bar.

Should the court find that the abuse does meet that high bar, the abuse does not impact the amount of money paid in spousal or child support.  However, this conduct by one spouse can affect custody and access arrangements as is discussed in our blog post here.

Sources:

  1. Catherine Christopher, The Law of Domestic Conflict in Canada, vol. 1 (Toronto: Thomson, Carswell, looseleaf – updated to 2016, Release 2) (at 1-12.1).

This post is provided for the purposes of legal information only and is not to be construed as legal advice.

LGBTQ Parents and Custody and Access

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One fear that some parents may have is whether their LGBTQ status might affect their rights when it comes to Custody and Access.  Thankfully, this is not in and of itself a ground to refuse custody or access to a parent as the case law below will demonstrate.

Custody

As mentioned in our last post regarding conduct that can affect custody or access, what courts will want to see is whether the conduct of the parent impacts the best interest of the child.

What courts will do is consider a parent’s LGBTQ orientation among other factors to make a determination about a person’s ability to parent.  They will look at whether that orientation actually affects the healthy development of the child.  The Courts in Bezaire v Bezaire had the following to say at para 18 of the decision:

“In my view homosexuality, either as a tendency, a proclivity or a practised way of life is not in itself alone a ground for refusing custody to the parent with respect to whom such evidence is given. The question is and must always be what effect upon the welfare of the children that aspect of the parent’s make up and lifestyle has, and it will therefore be a question of evidence in that very case as to whether what has been shown to exist has or may tend to have effects adverse to the welfare of the children.”

In addition to this, the court in Re K states the following:

“There is, in short, no evidence that families with heterosexual parents are better able to meet the physical, psychological, emotional or intellectual needs of children than families with homosexual parents.”

What we can see from this is that courts are very clear in stating that sexual orientation alone is no ground in and of itself that negatively impacts on a person’s ability to parent their children, meaning that LGBTQ parents are recognized as equally capable as heterosexual parents when it comes to decisions regarding custody.

Access

The same principles apply when courts make decisions regarding access to children.  Again, the courts are going to make a determination on whether a parent’s LGBTQ orientation, as well as other facts, affects the child’s best interest.

For example, the courts in Templeman v Templeman found that an openly gay lifestyle was not a reason in and of itself to restrict access or require that it be supervised.  In Templeman, psychiatric evidence was produced that showed conclusively that the father had a strong loving bond with his children, and that his gay lifestyle posed no risks in harming his children.

Caselaw

  1. Bezaire Bezaire (1980), 20 R.F.L.(2d) 358 (Ont.C.A.);
  2. Re K (1995), 15 R.F.L. (4th) 129 (Prov.Div.):
  3. Templeman v. Templeman, [1986] W.D.F.L. 233, 2 A.C.W.S.(3d) 294 (B.C.S.C., Dec. 22, 1986).

This post is provided for the purposes of legal information only and is not to be construed as legal advice.

Bill C-45 and Real Estate Presentation

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In response to Bill C-45 recently taking effect, Geoff Rabideau has taken some time to put together a presentation outlining what we do currently know about the laws surrounding Cannabis in Ontario, and what some of the potential changes may be that we will notice in respect to real estate.

To view/download the PDF, please click below:

Bill C-45 and Real Estate_brokers

Please keep in mind that this is being provided for informational purposes only and is not to be taken as legal advice, and that the specifics of the Cannabis Act will continue to evolve in the coming months and years in response to the outcome the law has on Canada and Ontario.

 

Past Conduct of Parents in Determining Custody and Access

Can the Past Conduct of a Parent be Used to Determine Custody and Access?

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I have had clients in the past come to me with this question wondering if they could use the behaviour of their former spouse as evidence that custody or access should be limited as a result of their actions. While this could be true, generally it will only matter where those actions have an effect on their ability to parent the child.

Let’s look a little closer at what this actually means.

First, we need to have a refresher on the “Best Interests of the Child” under s. 24(2) of the Children’s Law Reform Act (“CLRA”). From here, we can now look at how past conduct of a spouse may be factored into that list under s. 24(2).

24(3) of the CLRA shows us that past conduct can be considered but ONLY in relation to custody or access and ONLY THEN in accordance with s. 24(4) of the CLRA. The language in these sections identifies that the conduct will be considered only if the conduct is relevant to the person’s ability to act as a parent (s. 24(3)(b)), and also if there was violence or abuse against the spouse, parent of the child, member or persons’ household, or any child (s. 24(4)).

Keep in mind that anything done in self-defence or to protect another person does not fall under this category of violence or abuse mentioned above (see. S 24(5)).

The Divorce Act (“DA”) also makes mention of these issues under s. 16(9), where again they show that the past conduct is not relevant unless it affects the persons’ ability to act as a parent.

Let’s take adultery as an example.  Somerville v. Somerville is one such case where the extra-marital affair of the husband resulted in the end of the marriage.  What the court found was that the affair only spoke to the husband’s ability as a spouse, NOT his ability to act as a parent to his child.  Therefore it was not a relevant consideration when determining custody or access.


Relevant Parental Conduct

When determining custody or access, courts start with relevant parental conduct to determine who the custodial parent would be and who would be entitled to access.  These initial relevant considerations could include, but is not limited to:

  1. Who has been making the decisions for the child?
  2. How often does the child see each parent currently?
  3. Who prepares the food and clothing for the child?
  4. Who arranges after school activities etc?

Adjusting Terms of Access

After the initial assessment, courts will then see if the conduct of the parents should be considered to see how the terms of access might change such as: frequency, duration, supervision, overnight access, or even if access should be denied.

To support this analysis under s. 24 of the CLRA, Justice Dunn in T.(R.R.) v. T.(G.) considered the use of additional factors:

  1. the non-custodial parent’s acceptance of the custodial parent’s responsibility for the child’s discipline and conduct;
  2. the non-custodial parent’s punctuality, attendance and behaviour on access visits;
  3. the non-custodial parent’s attempts to keep informed of the child’s current events, health and achievements;
  4. the non-custodial parent’s attempts to help the child adjust to returning to the custodial parent; and
  5. the non-custodial parent’s sensitivity to time limitations on the visit.

Sample Case T.(R.R.) v. T.(G.)

In T.(R.R.) v. T.(G.),  the father was denied access because he:

  1. Repeatedly showed up for visits drunk;
  2. Left multiple threatening messages on the mother’s answering machine;
  3. Acted inappropriately during his access visits;
  4. The children didn’t want to visit with the father; and
  5. The children were in a better emotional state when they did not see the father.

Here we can clearly see that the conduct of the father was directly affecting his ability to parent the children.

As a final note, I would like to point out that no parent has an inherent right to access to the child simply because they are the biological parent, nor do they have any proprietary rights or even domain over their child.  See Montgomery v. Montgomery, where the court was clear in showing that no biological link should be permitted to surpass the best interests of the child.

 

Case Citations:

  1. Somerville v. Somerville, 2007 ONCA 210, [2007] O.J. No. 1079, 2007 CarswellOnt 1697, 36 R.F.L.(6th) 7
  2. (R.R.) v. T.(G.), [1994] O.J. No. 2453
  3. Montgomery v. Montgomery, [1992] O.J. No. 2299, 42 R.F.L.(3d) 349 (C.A.) (at 360 [R.F.L]

 

Legal Disclaimer that this is information only and not to be construed as legal advice.

Is Probate really necessary? Not if it is the “First Dealing” of the Property since Conversion

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Several years ago the Province of Ontario changed from the Registry System to the Land Titles Conversion Qualified (LTCQ) system for the registration and searching of real estate title (ownership).  The Registry Systems was a paper system, whereas, the LTCQ system is an electronic system, which provides efficiency in searching and registering title and provides assurances that the title registered is valid title, due to the fact that there is no concern of duplicate entries, as was prevelant in the paper Registry System.

If a transfer or sale of a property is being completed and a deceased party is registered on title it is important to know whether or not probate is required to be completed, as the cost savings from not having to complete probate can be substantial.

It is important to know that probate does not have to be completed on a property where it is the first dealing of the property since it has been converted from the Registry System to LTCQ.

The First Dealings Exemption is available in instances where the deceased party on title acquired the property while it was registered under the Registry System and continued to be registered on title, uninterrupted, after it was converted to LTCQ. This First Dealings Exemption would continue to apply as long as the deceased did not transfer their ownship of the property, so the fact that they registerd and discharged mortgages after they acquired the property would have no effect.

The First Dealings Exemption would continue to apply in the instance that a joint tenant, who was registered on title previously with the recently deceased, passes away and a survivorship application was completed to transfer the title solely into the ownerhsip of the recently deceased. Lastly, transfers of title between spouses due to the breakdown of the marriage would not result in the First Dealings Exemption being lost. However, if there is no valid Will and Last Testament then such discrepancy will vitiate the usage of the First Dealings Exemption.

The Divorce Process

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Should you determine that your relationship is over and that you wish to get divorced, you will need to follow the process outlined below in order to officially terminate your marriage.  If you are unsure about the nature of your relationship, take a look at our previous blog posts regarding Common law vs. Marriage and Separation and Divorce for a background regarding what is required in order to be eligible to get divorced.

Generally, the reason a divorce is granted is because two married persons have been separated for a year. However, you do not need to actually wait for a year of being separate before you can begin the divorce process. You will just have to wait until the year is up before a judge can grant you a Divorce Order. Be aware that if you reconcile the relationship for more than 90 days you will have to start the year separation period over again- (see separation and divorce article for more information). If you are getting divorced as a result of adultery or physical or mental abuse, then you do not need to wait for a year for the Divorce Order to be granted.  However, you will need to provide documentation or other evidence to support your claim for adultery, physical or mental abuse as a reason for breakdown of marriage.

Both spouses do not need to agree to the divorce, either spouse can apply for it. However, if one spouse brings the application for divorce, the other spouse has the ability to contest it, see s. 8(1) of the Divorce Act (“DA”) and Rules 8 and 10 of the Family Law Rules .

One final thing to be mindful of is that judges will not grant a divorce if they believe that no reasonable arrangements have been made to support the children of the marriage, see s. 11(1)(b) of the DA.

Can I get Divorced if I’m not a Canadian Citizen?

Yes. Canadian citizenship is not a requirement for divorce in Canada. However, it is required that you or your spouse have been living in a Canadian Province for at least 1 year preceding the divorce, see s. 3(1) of the DA.

Things to Consider when Getting Divorced

Before getting divorced, it’s important to think about the following family matters:

  1. Custody and Access for children;
  2. Child and Spousal support;
  3. Property Division including things such as:
    1. Who gets the matrimonial home?
    2. How to split pensions;
    3. What happens to bank accounts?
    4. Who pays off any existing debts?

These issues can be dealt with in a separation agreement instead of through court which can save a lot of time and money. Judges will take separation agreements seriously and are unlikely to overturn items in the agreement unless there are deficiencies with the agreement or information was not disclosed (see our previous post on separation agreements for more information). Judges also have the ability to make decisions on the above noted matters before a divorce is finalized through Endorsements and Orders. It is best to speak to a lawyer regarding your rights and obligations to ensure that you are properly protected during the divorce process.

3 Different ways to Approach a Divorce

Depending on your particular circumstances, you have three options available to you should you wish to proceed with a divorce:

  1. General Application;
    1. This approach is taken when the parties cannot agree on how family matters should be resolved;
  2. Simple Application;
    1. You make this application where the ONLY THING you are claiming is a divorce;
  3. Joint Application;
    1. You can take this approach when both you and your ex spouse consent to a divorce and bring the application together;
    2. You can also bring a joint application where you both agree on all family matters.

What will I need to begin the Divorce Process?

This will depend on what type of application you bring. Different applications require different forms depending on your particular circumstances and what issues are contested between you and your ex spouse.  It is highly advised that you speak with a lawyer to determine which forms you will need to ensure you are properly protected. See this link for a list of Family court documents that you can review – http://ontariocourtforms.on.ca/en/family-law-rules-forms/.

One document that you will have to have is you marriage certificate. If your marriage certificate is in another language you will have to get it translated. If your spouse is deceased you will need proof of death.

Documents you generally need for a Divorce include:

  1. Form 8 Application;
  2. Form 6B Affidavit of Service;
  3. Form 36A Affidavit of Divorce;
  4. Form 25A Divorce Order.

If there are outstanding family matters that need to be deal with, you might also need the following:

  1. Form 13 or 13.1 Financial Statements if support or property are contested;
  2. Support Deduction Order;
  3. Form 35.1 Child Custody and Access.

 Is there a time limit for me to apply for a Divorce?

There are no time limits (what are called limitation periods) to apply for a divorce. Nor are there limitation periods to apply for child or spousal support. However, spousal support is based heavily on need; if you do not apply for spousal support for several years a judge may be inclined to see that you do not need support and may not grant it. Child support is the right of the child and courts will uphold this very strictly.  See our posts on spousal support and child support for more info.

Also, there is no limitation period on custody and access applications. You must be mindful of something called the status quo however. Judges do not want to disrupt a child’s stable home environment and are less likely to change it if their current situation has been in place for some time.

There are limitation periods for an equalization payment (see previous post for more information). These limits under s. 7(3) of the Family Law Act are as follows:

An application regarding an equalization payment cannot be brought after:

  1. 2 years after day of Divorce of annulment;
  2. 6 years after separation and there is not prospect they will resume cohabiting;
  3. 6 months after death of a spouse.

Do I need a Lawyer in order to get Divorced?

No. You can bring the application yourself, or jointly with your spouse without the aid of a lawyer. However, it is always best to seek the counsel of a lawyer specializing in family law to ensure all your rights are protected, ESPECIALLY when there are a lot of issues between you and your ex spouse that you do not agree on. Lawyers have the expertise with the law and court procedure to ensure that the divorce can move ahead as smoothly as possible.

Even if it is a simply divorce, having a lawyer support your through the process can greatly reduce stress and complications.

When does the Divorce actually take effect?

31 days after the date on which judgment granting the divorce is rendered, see s. 12(1) of the DA. Generally, this means you have to:

  1. Start the application by filing and issuing appropriate documents for divorce;
  2. Serve other party and wait to see if they respond (minimum of 30 days after serving your ex spouse);
  3. File the affidavit for Divorce and Divorce Order for the Judgment if no response from your ex spouse;
  4. Wait for Judge to provide the Judgment granting Divorce and to sign the Order;
  5. Wait 31 days after the date of the signed Order.

This process usually takes a few months but can be much longer depending on how litigious both parties are. If you are granted the Divorce, s. 13 of the DA states that it is effective across all of Canada.

Furthermore, s. 12(7) of the DA states that the court must provide you with a Divorce certificate if you request it that can be effective as of a specified date.

Can I change the Divorce Order?

Once that 31 day period after the Order is signed by the Judge passes the Divorce is final. However, this does not mean that you cannot revisit certain items such as custody, access, or support.  These items can always be changed should both parties consent to any changes or the court deems it just. This is because income can change, spouses may want to move or any other material change that may require a change to the arrangements in place at the time of divorce.

Contact our knowledgeable staff here at Rabideau Law to see how we can assist with any divorce or family law issues you may have.

Disclaimer: The above is for informational purposes only and does not serve as legal advice. Please speak to your lawyer to better assess your specific situation.

Canada's legalization of Cannabis Use: How will it affect family law?

Canada’s Legalization of Cannabis Use: How Will it Affect Family Law?

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Canada’s new Cannabis laws came into force October 17th, 2018, and it is important that persons who choose to consume the drug be aware of what the new laws allow (for a summary of some of the new laws see http://www.justice.gc.ca/eng/cj-jp/cannabis/).

Failure to properly understand the laws and what is permitted regarding possession, distribution, and consumption could cause complications not only for criminal reasons, but potentially family law reasons as well.  These complications could affect some family law issues such as:

  1. Custody and Access
  2. Residency
  3. Mobility

What does The Cannabis Act allow?

Individuals can now legally do the following:

  • possess up to 30 grams of legal cannabis, dried or equivalent in non-dried form in public
  • share up to 30 grams of legal cannabis with other adults
  • buy dried or fresh cannabis and cannabis oil from a provincially-licensed retailer
    • in provinces and territories without a regulated retail framework, individuals are able to purchase cannabis online from federally-licensed producers
  • grow, from licensed seed or seedlings, up to 4 cannabis plants per residence for personal use
  • make cannabis products, such as food and drinks, at home as long as organic solvents are not used to create concentrated products

It is important to note that cannabis must be supplied from a legal source as described above.  Any illicitly acquired cannabis is not protected by the act and may result in penalties.  Furthermore, although edible products can be produced at home, they are not legal for sale for approximately one more year.

Youth and Cannabis

One of the purposes of The Cannabis Act (the “Act”) is to protect the youth from accessing cannabis.  As the Act provides, “No person may sell or provide cannabis to any person under the age of 18”.  This means that individuals cannot give or sell cannabis to youth, or use a youth to commit a cannabis-related offence.

Travel and Cannabis

Cannabis is still illegal in most of the United States.  Crossing the border without properly understanding these laws could create significant issues.  Also, each province is responsible for developing their own regulations regarding Cannabis such as:

  • increasing the minimum age in their province or territory (but not lowering it)
  • lowering the personal possession limit in their jurisdiction
  • creating additional rules for growing cannabis at home, such as lowering the number of plants per residence
  • restricting where adults can consume cannabis, such as in public or in vehicles

Pardons for Simple Pot Convictions

Now that individuals are allowed to possess up to 30 grams of legal Cannabis, Ottawa is moving to pardon those with a pot possession conviction of 30 grams or less (https://globalnews.ca/news/4558996/cannabis-pardons-simple-possession/).  However, those seeking the pardon will have to apply for one.

How might this affect Family Law?

Some questions that may be tested in the future regarding these new laws could include:

  1. Should a parent be allowed to exercise access visits at their home if they fall within the allowed possession or consumption laws? Would this be contrary to the purpose of the Cannabis Act to protect the youth?
  2. What happens if a parent owns illicit cannabis that was shared improperly between adults and contrary to the new laws? Would a judge factor this into any parenting arrangements?
  3. If a person had their parenting arrangements affected by a pot possession conviction, how could that change if their possession conviction is then pardoned?
  4. What if a parent tries to take the child across the border to the US or another province, but is found with legal marijuana in their possession? Would this be factored in negatively by a judge at any family law court proceedings?

Case law will be developed over time regarding Cannabis consumption and possession and how it can affect Family law issues.  We will be keeping an eye on how these and other issues will be interpreted by courts to ensure that we can provide you with up to date information on the issue.

 

Disclaimer: The above is for informational purposes only and does not serve as legal advice. Please speak to your lawyer to better assess your specific situation.

Rabideau Law Food Drive 2018

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We are proud to announce that we will be holding a Food Drive from November 1st-27th in support of The Food Bank of Waterloo Region, and in the spirit of GivingTuesday.

What is GivingTuesday?

As stated on the GivingTuesday website:
“It is a global movement for giving and volunteering, taking place each year after Black Friday. It’s a time when charities, companies and individuals join together and rally for favourite causes. In the same way that retailers take part in Black Friday, the giving community comes together for GivingTuesday.

GivingTuesday harnesses the potential of social media and the generosity of people around the world to bring about real change in their communities; it provides a platform for them to encourage the donation of time, resources and talents to address local challenges. It also brings together the collective power of a unique blend of partners – nonprofits, civic organizations, businesses and corporations, as well as families and individuals – to encourage and amplify small acts of kindness. Across Canada and around the world, GivingTuesday unites communities by sharing our capacity to care for and empower one another.”

To work our Food Drive in with GivingTuesday, we will be going to visit The Food Bank on November 27th to deliver the donations we have collected over the month.

Why should you donate?

• The Food Bank serves a Community Food Assistance Network of more than 80 agencies and community food programs. 2,000 meals are served daily by this Network.
• 49% of households seeking assistance are families with children.
• Just $1 will provide 3 meals.
• 215 food hampers are distributed every day.
• Community nutrition workers teach healthy eating and food budgeting skills at 16 different locations.
• 1 in 20 households in Kitchener-Waterloo are hungry.

How can you help?
• Make a donation
$20 will feed a family for 4 days
Tax refunds are available for donations
• Donate food
Most needed items include:

o Canned stews and chili
o Canned meat and fish
o Beans in sauce
o Pasta sauce
o Canned pasta
o Canned soup
o Canned fruit
o Dried beans
o Hot cereals
o Rice
o Peanut Butter

Donations will be accepted at our office, 501-305 King St W, Kitchener.

When making your donations, be sure to let us know whether your donation is in support of Geoff Rabideau or Roger MacIntosh’s teams!

If you have any other questions, feel free to contact Kayla at kkompter@rabideaulaw.ca

Consumer Proposal versus Division 1 Proposal

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What Are The Differences Between a Consumer Proposal and a Division 1 Proposal?

Many people are surprised to discover that Insolvency Trustees are able to offer two different types of proposals through the Bankruptcy Insolvency Act. The first of these is the commonly-known Consumer Proposal, and the second is called a Division 1 Proposal.

 

What are the differences?

…and why would someone select one type of proposal over another?

 

Details of a Consumer Proposal

A Consumer Proposal is available toindividual debtors whose total debts do not exceed $250,000 (excluding the mortgage on their principal residence). When someone files a Consumer Proposal, their Insolvency Trustee will analyze the value of their assets, the size of their debt load, and the amount of net household income coming to arrive at an amount the Trustee feels the Creditors will accept. This is normally a percentage of what you owe them, payable over a specific period of time (normally five years). All payments are made as a single monthly payment to the Insolvency Trustee, and he/she distributes those funds (as a dividend payment) to the various creditors.

Compared with the Division I proposal (see below), a Consumer Proposal is a simplified process. A Consumer Proposal is available to individuals only. There is no interest mounting during the term of the Consumer Proposal and no additional costs levied for Trustee involvement.

 

Details of a Division 1 Proposal

The second Proposal available to be filed is called a Division I Proposal. Like a Consumer Proposal, this is a formal procedure overseen by the Trustee and the Bankruptcy and Insolvency Act. This type of Proposal is available to businesses and individuals — there is no limit with respect to how much money is owed (other than the amount owing must be over $250,000). As with a Consumer Proposal, in a Division I proposal, you work with one of our Insolvency Trustees to put together an offer to pay your creditors a percentage of what you owe them over a specific period of time. And just like the Consumer Proposal, all payments are made through the Insolvency Trustee, and the Trustee uses those funds to pay each of your creditors

 

Comparison of a Consumer Proposal vs a Division 1 Proposal

Let’s take a look at a breakdown of the similarities and differences between a Consumer Proposal and a Division 1 Proposal, so you can determine which type of Proposal would be best for your situation:

Consumer Proposal Division 1 Proposal
Must be less than $250,000 in debt. Must be more than $250,000 in debt.
Available only to individuals. Available to individuals, receivers, a liquidator of an insolvent person’s property, a bankrupt, or a Trustee of the estate of a deceased bankrupt.
Once electronically filed with the Federal Government, protection is in place immediately. Creditors notified within 5 business days. Once electronically filed with the Federal Government, protection is in place immediately. Creditors notified within 5 business days.
Not Applicable. The Trustee must file a statement indicating the projected cash flow of the insolvent.
Once filed, unsecured creditors have 45 days to vote for or against the proposal or put forward a counter-offer. If approved by the majority of creditors, the Proposal gains deemed court approval 15 days later. A mandatory Meeting of Creditors is set up by the Trustee at the time the Proposal is filed. This Meeting of Creditors shall be held within 21 days of the filing of the Proposal. At the meeting of creditors, the Trustee will present the Creditors with a report on the statement of the insolvent person’s business and financial affairs. The Creditors then vote in favor or rejection of the Proposal.
The Trustee will present the creditors with an estimate of what they would realize in a bankruptcy, compared to the amount they would receive in the proposal. The Trustee will present the creditors with an estimate of what they would realize in a bankruptcy compared with the amount they would receive in the proposal.
The settlement offer must be “sweeter” than the creditors would receive in a Bankruptcy. The settlement offer must be “sweeter” than the creditors would receive in a Bankruptcy.
If the Proposal is rejected, the debtor may opt to file a Bankruptcy, or attempt to settle with the creditors directly in an informal manner. If the Proposal is rejected at the Meeting of Creditors, the debtor is automatically bankrupt.
2 mandatory counseling sessions must be attended during the Consumer Proposal (the first within 60 days, the second within 210 days). Counseling sessions are not required in a Division 1 Proposal.
No monthly income statements required. No income statements required once filed.
Tax refunds go to the debtor. Tax refunds go to the debtor.
Finishing the Proposal can take 1-5 years. Paying down the proposal earlier is recommended and welcomed. A Division 1 Proposal is normally a five-year process, but the length can differ. Paying down the proposal earlier is recommended and welcomed.
If three payments are missed, the Consumer Proposal is considered “annulled”. Protection is immediately lifted and the creditors have the legal right to pursue the amounts owing to them. In a Division 1 Proposal, if in default the protection is lifted and creditors have the legal right to pursue amounts owing to them.
Paying down the Proposal earlier is the ideal solution – no penalties, no interest, and once completed the credit rating can begin to improve. Paying down the Proposal earlier is the ideal solution – no penalties, no interest, and once completed the credit rating can begin to improve.

 

Proposal vs Bankruptcy

If we compare either type of Proposal to a Bankruptcy, the major advantage of the Proposals is that you retain all of your assets. Like a Bankruptcy, in either Proposal all actions launched against you by unsecured creditors (such as wage garnishments or frozen bank accounts) will be stayed (stopped). And once your creditors have agreed to your settlement offer, the dollar value of the settlement cannot change – even if you increase your monthly income, win the Provincial lottery or inherit a large sum of money from a distant relative.

 

Information provided by Farber Licensed Insolvency Trustees. Original post

 

Separation and the Matrimonial Home

Separation and the Matrimonial Home

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On separation, parties often have to make hard decisions regarding how they will split assets, who will pay support, and how they will move on from the relationship.  At this time, one of the most contentious and difficult items to deal with is the Matrimonial Home.  Who gets to keep it? Will the kids remain there? Do we have to sell it? How much equity do we each get?

The matrimonial home is such a significant asset of the marriage that there is a whole section of the Family Law Act (FLA) devoted just to it (see part 2 of the Family Law Act) 

Keep in mind that these provisions only apply to Married spouses (see CL vs. Married spouse post).  Common law couples only have property rights as far as their title interest goes.  If you are common law, and you are not on title to the property, you will have to consider other equitable remedies such as a constructive trust or resulting trust claim through litigation if you want a part of the home.

First, it’s a good idea to understand what the matrimonial home is.  S.18(1) of the FLA defines a matrimonial home as:

Every property in which a person has an interest and that is or, if the spouses have separated, was at the time of separation ordinarily occupied by the person and his or her spouse as their family residence is their matrimonial home.

What’s interesting here is that more than one home can qualify as a matrimonial home.  This means that if you own a cottage that the family uses regularly at the time of separation, this could be considered a matrimonial home as well.

So what if you moved into a home different from the one you lived in when you got married? Remember that this rule applies to properties that at the time of separation were ordinarily occupied by the person and their spouse.  Any other property you owned during the marriage that you no longer live in ordinarily is treated differently.

What if you have property outside of Ontario? Do we apply the same “matrimonial rules”? Unfortunately no.  This rule only applies to homes in Ontario as s. 28(1) of the FLA indicates.

 

What rights do I have to the Matrimonial Home?

Under the FLA s. 19(1) – both spouses have an equal right to possession of the matrimonial home, regardless of who is on title to the home (the owner).  This is a right not against the home itself, but against the other spouse.  This doesn’t mean that you have a right to take title to the home, but that you can enforce a right to live in the home through courts via an order for exclusive possession.

This remedy is provided under s. 24(1) of the FLA.   This is an extreme measure.  This is an order from the court saying one spouse has to leave their own home; a place where people build their lives and find security, which is a significant reason why the matrimonial home has its own section under the FLA.

  1. 24(3) of the FLA provides criteria the courts will consider when granting an order for exclusive possession:
  2. the best interest of the children affected;
  3. Any existing orders under Part 1 (family property) and any existing support orders;
  4. The financial position of both spouses;
  5. Any written agreement between the parties;
  6. The availability of other suitable and affordable accommodation; and
  7. Any violence committed by a spouse against the other spouse or the children.

You also have a say in how the matrimonial home is to be disposed of or encumbered under s. 21(1) of the FLA.  Even if you are not on title, your ex spouse cannot sell the home, transfer it, or refinance it without your consent.

You are also entitled to the value of the home and how that is distributed.  See our post on equalization to understand how the home and other assets are distributed on separation.